COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING COMMITTEE ON COMMERCE AND ECONOMIC DEVELOPMENT - - - - Room 696, City Hall Philadelphia, Pennsylvania Thursday, February 12, 2004 1:15 p.m. - - - - RESOLUTION 040046 - Resolution authorizing the Committee on Commerce and Economic Development to hold hearings to investigate the proposed closure of Medical College of Pennsylvania (MCP) by Tenet Healthcare... PRESENT: COUNCILMAN W. WILSON GOODE, Chair COUNCILMAN MICHAEL A. NUTTER, Vice Chair COUNCILWOMAN JANNIE BLACKWELL COUNCILWOMAN BLONDELL REYNOLDS BROWN COUNCILMAN FRANK RIZZO REPRESENTATIVE KATHY MANDERINO REPRESENTATIVE JAMES ROEBUCK - - - - V A R A L L O Incorporated Litigation Support Services Eleven Penn Center 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 215.561.2220 215.567.2670 2 I N D E X RESOLUTION 040046 THOMAS LEONARD, ESQ., Tenet............. PHILLIP SCHAENGOLD, Tenet............... 6 STEPHEN KLASKO, Drexel University College of Medicine................ 23 7 JAMES ARCHIBALD, Drexel University College of Medicine................ 67 THOMAS MORGAN.......................... 144 JACK HIGHPOINT, Tenet.................. 184 3 2/12/04 - COMMERCE - RES. 040046
Good afternoon. This is the public hearing of the Commerce and Economic Development Committee on Resolution 5 No. 040046. My name is W. Wilson Goode, Jr. I'm Chair of the Committee. To my right is Councilman Michael Nutter, Vice Chair and primary sponsor of this resolution. Joining us also, who is a member of the Committee, is Councilman Frank Rizzo. At this time, I will ask the Clerk to please read the title of the resolution.
Resolution 040046, authorizing the Committee on Commerce and Economic Development to hold hearings to investigate the proposed closure of the Medical College of Pennsylvania by Tenet Healthcare Corporation and the devastating impact that such a closure would have on the patients and employees of MCP, the East Falls Community, and the City of Philadelphia; and further authorizing the Committee in furtherance of such investigation to issue subpoenas as may be necessary to compel the attendance of witnesses and the production of 4 2/12/04 - COMMERCE - RES. 040046 documents to the full extent authorized under Section 2-401 of the Home Rule Charter.
At this time, I will ask Councilman Nutter to please call his first witness.
Thank you, Mr. Chairman. I have a Thomas Morgan. Mr. Morgan had indicated an interest in testifying. (No response.)
Maybe he will attend later. Dr. Stephen Klasko and Mr. James Archibald. (No response.)
Mr. Phillip Schaengold. Good afternoon. As you all know, this is a continuation of the hearing from last week and the week before, so all of the same rules will be in effect. Why don't you gentlemen identify yourselves for the record, and then I'd like to talk about some of the information requests from previous hearings. 5 2/12/04 - COMMERCE - RES. 040046
My name is Phillip Schaengold, I'm Vice President of Operations for Tenet.
Tom Leonard, representing Tenet here, along with my partner Richard Limberg (ph). If I may, Mr. Vice Chairman, I handed up to the Chairman and to the Vice Chairman of this Committee a binder of documents that we believe contains all of the documents that have been requested that were not produced last week, including detailed financial information. I also, behind the first tab, handed in a letter addressed to Councilman Goode that attempts to answer all of the outstanding questions from last week's hearing.
Mr. Leonard, is this the letter dated February 12, 2004?
Yes, sir. Councilman, I also note that per 6 2/12/04 - COMMERCE - RES. 040046 your request there's a new table of contents that is stamped appropriately.
Well, I did want to ask you about that. When you handed the binder up a little while ago to the Chairman, I have one binder that has a -- I think what you refer to as appropriately identifying first sheet. It then has a table of contents that starts with title and then 1 and is numbered appropriately. When you handed up these items last week, you indicated that there was some confidential information in at least one of the binders but it was not identified. And you and I had a conversation, and I believe you've now identified those items. What I'd like to better understand, though, is this binder starts with Tab 38. The other binder seems to start with Tab 1. Do these binders go together?
They do. And the table of contents goes from one through the end marked as to which documents are confidential in the first binder through 37 2/12/04 - COMMERCE - RES. 040046 or 38 and then picking up with the new things that have been produced. So this table of contents here is for both binders, marked per your request.
Okay. I might 7 shift the table to the other book so I don't get confused. Let's talk about -- at the end of last week's hearing, there were a fair amount of back and forth about financials and financial statements and financial documents. The discussion I think started around the issue of how much information we would have. And I think in Tab 44, the discussion started with these one-page financial reports, and then we had more extensive discussion. Without going into a significant amount of detail, tell me now about Tabs 45 and 46. What are these?
Tab 44, as you stated, Councilman Nutter, does contain the one-page summary for each year, for MCP's fiscal years beginning with 1999.
Tab 45 contains detailed information by specific cost centers for each year that this summary represents. And Tab 46 is the entire financial set of documents for Fiscal Year '03 by every cost center and department within the hospital. That shows you the kind of detail that eventually rolls into Tab 46 and eventually rolls into the one-page Board report that is in -- I'm sorry, 45, and then rolls into 44.
So somehow, I guess, very carefully someone can take the about two inches of material in Tab 46 and drill it down to a one-pager in Tab 44.
It would go 46 and then it would drilled into 45 which eventually then becomes a one-pager which is in 44.
Okay. Let me ask this then, again, to get a clearer picture. First, let me say I appreciate the response to the information request from last 9 2/12/04 - COMMERCE - RES. 040046 week. Second, is it now possible -- you've given the Committee on Tab -- from Tab 44 it appears five years of the one sheet.
And then one year of 2003 with the more detailed information.
No, 45 has more detailed information for every year. And it's only Tab 46 has the entire 2003.
Okay. So if I go actually to the end of Tab 45, I'm actually starting with Fiscal Year '99 and moving backward to 2003?
Then I guess what I would lastly ask you is, could you replicate Tab 46 for the other years? Is it possible to recapture?
I'm not sure because the company changed fiscal years. We will certainly try to recapture as much of this detail as possible, but I'm not sure we 10 2/12/04 - COMMERCE - RES. 040046 can replicate it.
Or if I can at least have -- you've given '03. If I could at least get '02 and '01 with a Tab-46-like detail, is that possible?
We'll be glad to try to do that, Councilman. I've gone through this. I think you'll find when you look at the eight or nine pages for each year which summarize --
From Tab 45. The detail in Tab 46, the level of detail for each department, each aspect of what goes on in that department, it might be of some interest to the people in the department, but I think you'll find the Tab 45 reports to be pretty thorough.
But we will try to comply with your request if after you look at it and you still want that level of detail.
Let me ask this question, because I want to respect the -- we 11 2/12/04 - COMMERCE - RES. 040046 made a request and you have honored the request, although you have a bit of a request on the transmittal. Obviously, some other people other than certainly myself or the Chair or any Member of this Committee may want to further examine some of these documents and information. What I need to better understand, I guess, is -- you've made a request for some amount of confidentiality, which I understand. On the other hand, I can't use the information without some further level of analysis of that information. Is the primary request that this not become a -- I think as we understand the term -- a public document?
Yes. If we analogize to a court proceeding, the confidentiality designation does not preclude the Court from sharing the documents with its law clerks and the people that are part of its operation, and we wouldn't expect that the confidentiality designation would preclude you from sharing it with Members of the Committee. We would not want it to become a public document because it 12 2/12/04 - COMMERCE - RES. 040046 does contain information that our competitors would be interested in.
Okay. Well, I understand that. You mentioned that last week. And I guess at this point, one of the things that I didn't particularly understand is why would a competitor be that interested at a certain level in the financial details of a hospital that you propose to close? I mean, what could they possibly do with the information or have any particular impact on the five remaining hospitals? If all the information is pertinent to that particular institution, it gives a picture, tells a story of ultimately its potential demise, what's the issue?
There are standard practices at Tenet and other hospitals that relate to protecting certain data that those institutions generate. We produced the information to this Committee, but we would not produce it unless there was an understanding that it was confidential, that it was under seal. And if we wanted to debate 13 2/12/04 - COMMERCE - RES. 040046 and set forth the reasons for that in a typical courtroom setting, we would do that after we cleared the courtroom.
Okay. I hear what you're saying and I do understand it. We will probably need to have some further discussion about that. Let me assure you that I don't think any member of the Committee asked for the information just for the purpose of trying to burn out your copy machines or because we don't have enough documents to look at. But many of us are interested in the future. And in this particular situation, one of the ways to understand the future is to try to figure out the past. And if there are a series of events that led to the decision that was made, and if we are going to have any possible future at this site, we at least need to know and understand better what happened during the time that Tenet has been operating the hospital. But I understand the request. I've heard the request, and we can have further discussion about it subsequent. Let me ask this question. In the 14 2/12/04 - COMMERCE - RES. 040046 course of the week, have there been any conversations or discussions related to the ongoing activities either at the hospital or potential future activities at the hospital that you can share with us in terms of its present status as well as any potential or future reuse?
We've had conversations with a couple of other parties about potential opportunities for that site, but they are very preliminary and those parties have requested to remain anonymous. But so far, there has not been any serious inquiry about the use of the MCP campus by any party.
Those developments, that interest has just developed since the beginning of these hearings? Because the last time you testified, I recollect, that there was no interest. 15 2/12/04 - COMMERCE - RES. 040046
That is correct. An individual has brought forward an idea on behalf of a party, and that party has not yet gone through its own process to actually put forward a concrete proposal. So it is so preliminary, they have requested that that information not be shared with anyone because we may never see a specific proposal out of this entity.
I just have a couple other questions for the moment. I've talked with the Chair. The Drexel University personnel who I called on before are now here. The intention was to have them up first. And so what I'd like to do is, after a couple of questions, shift our arrangement. Unlike in the past, you actually get to take a break and we'll have them up and then I'd like to have you back. Has Tenet begun discussions, again from my previous experience, with the City Avenue Hospital? 16 2/12/04 - COMMERCE - RES. 040046 You have at least one individual that I became very familiar with in the acquisition and disposition component or department of company. I think it's Mr. Fisk or Frisk.
Has there been any discussion -- has there been a replacement named for him?
There is a Department of Acquisition headed up by a gentleman by the name Paul O'Neill, and he has advised me that there has been no contact by any party interested in MCP as an acute care facility.
I understand. Again, in the City Avenue situation, I believe the consultant that was brought in at that time to initially try to turn the hospital around -- and again that did not work 17 2/12/04 - COMMERCE - RES. 040046 out. There were a variety of discussions at that time about potential reuses. And that same consultant worked with the community and with the organization to try to come up with a variety of ideas. Has the consultant that you engaged -- is it TRG? Has Tenet had any discussions with your consultant who made the report back in December with regard to any possible reuse of the facility, again, similar to the process that we utilized in the City Avenue scenario?
We have not had any conversations with TRG about other uses for that site.
Would the company consider bringing someone on -- I don't know TRG from any other company, so I'm not trying to get them any business. But obviously, you thought enough of them to have their assistance previously. Would the company consider bringing someone on to help in this process of potential reuse of the site either in the healthcare capacity or something similar to that for the moment to provide some 18 2/12/04 - COMMERCE - RES. 040046 third-party advice and direction both to the surrounding community, City Council, Governor's Office, and working with all the other parties? Would the company consider bringing someone to assist in that process?
I believe that we would be very glad to work with the City, the community, the State, in making sure that whatever decisions are made to dispose of this property are done in an appropriate manner. The decision as to what resources would be used would be made by the department in our corporate offices that would be responsible for this. But I would certainly bring that to their attention.
Lastly, at least for me for the moment, there had been discussions, I believe, at the first hearing with regard to the Delaware Valley Healthcare Council and their obvious City-wide role in watching what's going on with the various 19 2/12/04 - COMMERCE - RES. 040046 hospitals in town. Have there been any further discussions -- I think at one point you were at the table at the same time the gentleman representing that organization, possibly the first hearing. Has there been any further discussions with that organization about the MCP site in terms of continued healthcare utilization?
No, there have not been any further discussions with them.
No. No reason for it. There were just no particular reason to have that kind of discussion. They are, in a sense, an umbrella organization for all the hospitals in the region, and we just simply have not had that conversation.
Well, Mr. Schaengold, I'd ask you if you would have that kind of conversation. I understand that they're an umbrella organization for all of the hospitals, but they are, again, a good organization to talk to, given their general 20 2/12/04 - COMMERCE - RES. 040046 perspective and kind of a broader, larger, global understanding of what's going on in healthcare here in the City of Philadelphia. If we're going to move this process to a point of understanding where the company has made a decision, it may, in fact, be irreversible. You have other hearings and meetings in this same building where those decisions will get made, not necessarily in this room, but you have a court process to deal with and a wide variety of other issues, the State Department of Health and all of that. But I guess what I'm suggesting to you, and I want to say this with every amount of respect and sincerity, but seriousness, Tenet has five hospitals in this market, plus MCP. You've made a decision about MCP. We're naturally trying to do everything we can to reverse that decision or make something better come from it. But I guess I would call on you in a corporate neighbor capacity that if the organization cares about this market and if it cares about its reputation in this City and in conjunction with the Commonwealth, I can only 21 2/12/04 - COMMERCE - RES. 040046 implore you to try to do as much outreach as possible to a variety of people around, not just for the purpose of having meetings to have meetings, but in a serious fashion to talk with people who also care about this market who operate in this market, and try to figure out how to make this situation better than it presently is. And I know you have a lot of competing time pressures and interests, but I would only suggest to you that spending some time, after fulfilling voluminous information and data request -- but I'm sure you're not making the copies personally -- as the CEO having the responsibility for this system, I would ask that you reach out, whether it's to the City, the State, Delaware Valley Healthcare Council, other entities, and put yourself in a position to be able to say, "Look, we know you didn't like this particular decision, but we have these ideas. And what it will take is these four steps to make something like this happen," and get engaged with us in a process of providing to the greatest extent possible, whether it's an 22 2/12/04 - COMMERCE - RES. 040046 acute care hospital or not, some level of healthcare service that is responsive to the needs of the people in the East Falls and North Philadelphia and broader communities. That's what I have to ask you and call on you to do that through the resources that you have available to you.
I appreciate that. And, in fact, I will tell you that we have begun reaching out. I've met with the leadership of the Chamber. I've made it known to the community that Tenet does want to be part of the process of trying to identify what is the appropriate manner in which to provide a healthcare safety net in this community. We will reach out, as per your suggestion, and we are prepared to work with others to try to figure out how best do we all provide an accessible and affordable healthcare system here in Philadelphia.
All right. I'd appreciate that. I mean, you've put a date out. I don't know what's going to happen with that date one way or the other, but it's a 23 2/12/04 - COMMERCE - RES. 040046 time pressure situation. And I think what we need to hear and then certainly see by action is the company believes that there is a sense of urgency about dealing with this particular situation and not just let it happen and then what happens after that just kind of happens. I truly believe that if you walk away from this situation and just put up the boards and make sure that the facility is secure in some way, shape, or form, it will have a detrimental effect on the company and its reputation here in Philadelphia. And I think it just increases the burden that those responsible for operating those hospitals and yourself as the senior person here in Philadelphia will have to carry. So I'm just suggesting that to you.
Mr. Chairman, unless there are any other questions for the moment, I'd like to have Drexel University.
Thank you, gentlemen. We had intended to call you third. So right now we'll ask if Dr. Klasko or Mr. 24 2/12/04 - COMMERCE - RES. 040046 Archibald is present? If so, if they will please approach the witness table. And for the record, let me add that we've been joined by Representative Kathy Manderino and Representative James Roebuck and Councilwoman Blondell Reynolds Brown, a member of the Committee. Good afternoon, gentlemen. Would you please identify yourselves for the record and start with some abbreviated testimony, if possible.
I'm Jim Archibald, the Senior Vice President for Health Services at Drexel College of Medicine.
My name is Steve Klasko, I'm the Dean of Drexel University College of Medicine, and I'm a practicing OB/GYN in the East Falls community associated with MCP.
I actually was asked to become Vice Dean for the MCP campus in October of 2001. And it would be worth giving a 25 2/12/04 - COMMERCE - RES. 040046 little bit of background in that, obviously, after the Allegheny situation, there were two campuses, and throughout the history of MCP and Hahnemann since the merger there have been either more or less Chairs and activity at one campus or the other. In October of 2001, there was a feeling that the balance had shifted toward Hahnemann. As the No. 2 person in the university and as someone who had dedicated his career to women's healthy, I volunteered to go over and become the Vice Dean of MCP.
Mr. Klasko, I'm sorry. I apologize for interrupting, but sometimes it happens. I didn't completely understand the comment that you just made about the balance shifting to Hahnemann. What does that mean? What are you talking about?
At one point in time when Allegheny was there, almost all the Chairs were at MCP.
Yes. So it's a 2/12/04 - COMMERCE - RES. 040046 two-campus system. So at one period of time, a Chair of a department is either going to exist at MCP or at Hahnemann. So in 2001, it was felt just the way that things had worked out, there were more administrative resources at Hahnemann than MCP. So in 2002, I went over and brought over a team to have the first Dean's Office at MCP. So this was the first time there was actually a Dean at the MCP campus. We proceeded to work toward differentiating that campus. And, Mr. Nutter, I think you've seen some of the materials around that. The goal was to make certain things take the traditional strengths of MCP, women's health, trauma, emergency medicine, and differentiate some services, predominately around neuroscience, predominately around diabetes, predominately around minimal invasive surgery. So that the goal was that for the first time, the MCP campus would have services that didn't exist at the other campus instead of them just being duplicative. In many ways, that was very 27 2/12/04 - COMMERCE - RES. 040046 successful. We created the largest robotics program in the City at MCP. It still exists there. We recruited someone from Jefferson to come over and run that. Tenet supplied the minimally invasive surgery rooms and the robot to make that happen.
That was in the 2002 time frame. We developed the technologically most advance neurosurgery system that was culminated, obviously, with the bringing in of the gamma knife. But it's not just the gamma knife. We have what we call an intra-operative MRI, probably the most advanced system for bringing in those kinds of brain cancer cases. We developed the neurosurgery practice network that was literally geared toward MCP but that brought in patients from Chestnut Hill Hospital and others. And then we brought in the university's only endocrinology team since Allegheny and created a diabetes center at MCP. 28 2/12/04 - COMMERCE - RES. 040046 So literally, the goal was to take the traditional strengths that existed at MCP, women's health, emergency medicine, trauma, and it had these differentiated services. The university invested significant amounts of resources, including the outpatient space in that site that, by the way, those projects are still going on, or were still going on as of the time of the announcement. There was almost a million dollars committed from the university in capital expense in improvements literally toward the end of 2003 of which some of that was literally going on as we were told that MCP was closing. So the university was incredibly committed, and I am and was personally committed to growing MCP as a very important part of the Drexel campus. When I got asked to become Dean in July, I came there, frankly, with a very MCP-centric mindset.
July of this year, July of 2004 -- 2003, I'm sorry. 29 2/12/04 - COMMERCE - RES. 040046
In October of 2001, we decided to bring a Dean's Office over at MCP. I started in January of 2002. In February of 2002, we put out a plan for growing the academic, research, and clinical missions at MCP, and we started to enact that plan. In the cases I brought up between 2002 and 2003, those two years, they were indeed successful. We were successful in securing the funding to get the minimally invasive surgery suites and the robot. We brought in the faculty. We brought in new neurosurgery faculty. We brought in new internal medicine faculty. We brought in new family practice faculty. And we basically set out a business plan in 2002 to move the academic research and clinical missions of the university forward and make MCP a more vibrant campus. I think from that perspective, I think we were actually very successful. We took the Henry Avenue Medical Practice which 30 2/12/04 - COMMERCE - RES. 040046 had been owned by Tenet -- Tenet had a physician service. Tenet decided to divest itself of its physicians. The Henry Avenue practice which was associated with MCP was about to go to another system, and we took them over as full-time faculty and that injected some more primary care into MCP. So, again, from a teaching point of view, from a clinical point of view, from a number of cases done point of view, from the way that our residents were taught point of view, we felt that we were moving along very successfully in that area. Obviously, there were some challenges and there was some significant hospital challenges.
Let me stop you right there for a second. I have to say that -- and, I mean, I think week to week, at least, my memory is fairly decent. What I remember hearing last week, at least, from Tenet and Mr. Schaengold was that in the course of the past year or so the hospital has been almost falling apart, services leaving, this going, that going, the other things 31 2/12/04 - COMMERCE - RES. 040046 going, doctors fleeing the place in droves. This week I'm hearing a story that sounds like the place is busting at the seams because there's so much going on. I mean, I haven't even started trying to be funny. I'm having trouble --
I will tell you that the overall influx of Drexel physicians was greater than the outflux. I think that Mr. Schaengold was responding to some specific concerns that were, as I recall the testimony last week, some specific concerns that were raised by one of his employees around some specific services. And what he said was that physicians coming and leaving are not something that the hospital has any control over and that in some specific areas physicians decided to leave. That's what I heard him say. I will, again, tell you that there was an overall influx of Drexel University physicians into MCP between the years 2002 through 2003 up to the current time, or at least up until the announcement. And I'll be 32 2/12/04 - COMMERCE - RES. 040046 happy to share that.
Well, if that were the case -- and at the moment I'm not disputing you -- how does that square with the threat, at least at the time, that trauma services, for instance, at MCP and possibly at Hahnemann, I believe, in the late -- or I'm sorry, early summer I think is my recollection of 2003, I was faced with the prospect that the trauma center at MCP was going to close. That's my recollection.
That was a decision made by Tenet. The university has basically been very consistent in saying to run from the university's perspective -- and I just want to sort of make this clear. I know you know this, but we are a clinical, research, and academic mission that does not own a hospital. From those three missions, running a group of physicians, having two trauma centers seven miles apart --
Right. And their story is they run acute care hospitals and they're not in charge of the doctors; that 33 2/12/04 - COMMERCE - RES. 040046 you are. You can't run a trauma center if you don't have doctors.
What we have been consistent with is that running two trauma centers seven miles apart was inefficient. It could be done. It was inefficient. It would require increased capital. We had been on record as saying we would like to have one and actually would have preferred that one to be at MCP. That was the university's position. As it turns out, we had two. And we had two throughout 2002. At the point that they stopped trauma services at Hahnemann, then we literally only did have one and that was at MCP. And then when the nurses' strike happened, they stopped trauma services at MCP. So that's the chronology. The reality is the university has been consistent that the most efficient way to run a trauma service is to have one Level for the university, and our preference at the time was to do that at MCP. And that's truly what was happening up until the nurses' strike when the hospital decided to close trauma at MCP also. 34 2/12/04 - COMMERCE - RES. 040046
Thank you, Mr. Chairman. Your last statement was that with regard the proposed closure last year of trauma services at MCP, that was a Tenet decision. My recollection of any the meetings or discussions I had was that Tenet did not want to close trauma services at MCP. And as a matter of fact, they were faced with the prospect of, one, no doctors to run the service and, two, a request, if not a demand, by the medical school for additional payments to keep trauma services at MCP. So those are the conversations and discussions that I participated in, and it was 35 2/12/04 - COMMERCE - RES. 040046 solely focused around a proposed closure of trauma services at MCP. Subsequently, my colleague who just joined us here at the table, Councilman Clarke, was then faced with the proposed closure of trauma services at Hahnemann at the same time that I was being told that trauma services were going to then stay open at MCP, and the story had just shifted down the street to my colleague. And quite honestly, I think what happened is someone didn't think that Councilman Clarke and I would ever have a conversation about this because one was being played off of the another. We finally did have a joint meeting to try to get it straightened out. Again, at the same time that the medical school or Drexel was in the middle of trying to get us to approve a major financing for the school, which is ultimately -- at least from my perspective, Councilman can certainly speak for himself -- is what got us to the bottom of the issue with regard to the trauma center. And quite frankly, I don't believe that but 36 2/12/04 - COMMERCE - RES. 040046 for the prospect of not having the financing, one or both those of trauma services possibly would have been closed. So there's been a whole lot of information floating around in this ping pong of who's responsible for what, part of which is why -- there are many reasons why, but one of the reasons why we're here today is to try to get a straight answer on this stuff, because the one group says, "Well, we just own the hospitals, we don't control the docs." Then we're hearing, "Well, we don't run the hospitals, we only deal with the doctors. And whatever they do at the hospital, that's kind of their business and the stuff just rolls down on us." Now, you're only going to be able to spin us in so many circles after a while. At least for myself, even I get it after a while. It may take me a little while, but I'll get there. So what is the story? How does this work? Before you get to that, though, I 37 2/12/04 - COMMERCE - RES. 040046 need to kind of go back to the start of this. When did you learn of the proposed closure of MCP?
About hours or so 6 before it was in the newspaper. The day 7 before. 8
December 17th, I think. 11 Whatever that date was that it was in the 12 newspaper in the morning, it was the day before.
And you had no 15 previous information or no indication that this might be going on all the while that you're building up services, sending docs, doing robots, gamma knife, all the other activities going on? You're just happy as a clam?
Not happy as a clam. We knew that the hospital was having some financial issues. I'm a member of the hospital's Board, and what we were doing was trying to do everything we could to increase 38 2/12/04 - COMMERCE - RES. 040046 the volume so that those financial troubles would go away. Those financial problems had not existed until just several months prior to the time of the closure. In FY '03, it had been a relatively stable financial situation, that is Mr. Schaengold has testified. After some of the outlier changes and that kind of thing, the hospital's financial picture went down significantly and we were doing what we can do --
Dr. Klasko, in what capacity were you informed, and who were you informed by in terms of the closure?
I was informed by Mr. Schaengold with Mr. Archibald in a weekly meeting that we normally have on Wednesdays. And as part of that weekly meeting, he started off by saying -- obviously a good part of our weekly meetings were about MCP, and he notified us that they would be announcing next day a closure plan for MCP.
The first question -- I'm not sure you answered it -- was, in what capacity were you informed? 39 2/12/04 - COMMERCE - RES. 040046
I was the Dean and he was the head of Pennsylvania region for Tenet.
I guess not. I guess I could have read about it in the newspaper.
Several other people here did. I just want to ask a question in what capacity?
I think we were meeting and talking about MCP issues. They were on the agenda. And Mr. Schaengold made it clear that he has some significant SEC regulations, but instead of sitting there and talking about what we were going to do to build MCP -- because while this might sound strange to you, I just had a faculty meeting two nights before about what we were going to do to help build volume at MCP. So Mr. Schaengold said, "Instead of talking about these issues, I need to inform you of this." 40 2/12/04 - COMMERCE - RES. 040046
Notwithstanding all that -- I don't mean to interrupt, but we want to make this as effective as it can be. With regard to those SEC restrictions, with regard to any other restrictions that were applied to the situation, who could and could not be informed, in the context of what Councilman Nutter was asking you earlier about the relationship in trying to find out how this thing really works between Tenet and Drexel, I'm asking, why you were informed 12 hours before it became public, why you were part of that informal meeting?
Why do you think you were informed in an informal capacity at a formal meeting, weekly meeting, whatever it was? The purpose of meeting was not to discuss closing of MCP, is that correct?
A good part of the agenda was to talk about what we were going to 41 2/12/04 - COMMERCE - RES. 040046 do about MCP. My answer is, I believe as a courtesy Mr. Schaengold asked us, "I need you to keep this confidential. We're under significant SEC regulations. It's not useful to spend an hour talking about MCP issues because tomorrow at some point" --
Thank you, Councilman Nutter. The Chair recognizes Councilwoman Blondell Reynolds Brown.
Good afternoon, gentlemen. A clarification question: Which Board are you a member of?
I'm a member of the MCP Hospital Board, ex officio as the Dean of the medical school.
And as a member of the Board, you were given 24 hours notice 42 2/12/04 - COMMERCE - RES. 040046 of the closing of the hospital?
No. I believe the Board was notified the morning that it was in the newspaper. I didn't go to that meeting, but I think there was a 7:00 a.m. meeting for the Board that I wasn't able to attend on that Thursday morning. And, again, just to make it clear, we were notified the afternoon or whatever before.
Help me remember. The ultimate decision then was made where and by whom? If it was not the Board that you sit on or the leadership of the Board you sit on --
We weren't part of any decision-making. I think that's been clear. Both as a Board member as the Dean of the medical school, both of those were, "This is some information. We are going to announce that we are closing or we are announcing the closure of MCP Hospital." It was not a discussion. We were never part of the decision-making of the decision to close. 43 2/12/04 - COMMERCE - RES. 040046 That was clearly outside of our purview, both as a Board member and as the Dean of Drexel.
So in your view, the decision to close the hospital was made by whom and where?
Well, the decision was clearly made by Tenet. I mean, that's not in my view, the decision was made by Tenet. My understanding, both from talking to Mr. Schaengold and listening to his testimony, is that decision was made in a meeting in December in someplace other than Philadelphia. I forget what he said, Dallas or Atlanta or whatever.
So as a layperson what appears to be a very unusual configuration of the relationships between these institutions, let's fast forward this. What is the ultimate impact, negative and/or positive, favorable or unfavorable, to Drexel University?
Well, it's a huge negative impact. I mean, it's 153-year-old organization which houses our Institute of 44 2/12/04 - COMMERCE - RES. 040046 Women's Health, it houses 130-some faculty, it was one of our primary clinical sites, it is part of the heart and soul of what has become Drexel University of College of Medicine. And that's why we fought so hard to try to create programs -- recognizing the financial reality, try to create programs that would allow that hospital to prosper in the post-outlier era. I mean, I spent half my time talking to alumni and alumnae who literally cry. I gave a talk for the New York OB/GYN Society three days ago, and there were five people there. It's a big part of the fabric of women's health in this country, the history is, and my career has been women's health. So if you ask me what's the negative impact, it's got a large negative impact to Drexel and to the women's health community and the hospital community and to the university community.
And what's the potential favorable impact, if any, given, again, this what appears to me a very unusual configuration of relationships that I'm still 45 2/12/04 - COMMERCE - RES. 040046 trying to follow?
I can't think of any favorable impact of losing one of our primary campuses and losing 240 residency slots in the middle of a recruitment year and having to move students out. I'm not sure what you're trying to get at, but there's nothing positive. As a dean, I have to project to my faculty, students, residents, and staff that we will move on and we will have a bright future. And we will move on and we will have a bright future, but there's absolutely nothing positive about losing one of your main campuses with not a whole lot of notice.
Thank you for your testimony. Thank you, Mr. Chairman.
Let me note for the record that Councilman Juan Ramos and Councilman Darrell Clarke, members of the Committee are in attendance, as well as State Senator Vincent Hughes. The Chair recognizes State Representative Manderino. 46 2/12/04 - COMMERCE - RES. 040046 REPRESENTATIVE MANDERINO: Thank you, Mr. Chairman. And thank you, gentlemen, for being here. Dr. Klasko, I want to ask this question in your capacity on the Board of Governors. And I preface it by saying I think it may be a more appropriate question for Tenet and Mr. Schaengold. And he was dismissed before I got to ask it, but I don't want to miss the opportunity if I then find I was at the right church but in the wrong pew in terms of who understood and knew what. But you did mention in your capacity of the Board of Governors you were having weekly meetings about what to do about MCP, how to improve it --
No, I'm sorry. What I said is Mr. Archibald and Mr. Schaengold and I have weekly meetings around common interests of the university and Tenet, not in my role as Board of Governors; in my role as Dean. And obviously, one of those weekly issue were programs around MCP, just like there were also programs at Hahnemann. So it had nothing to 47 2/12/04 - COMMERCE - RES. 040046 do with the Board of Governors. REPRESENTATIVE MANDERINO: Okay. With regard to the programs around MCP, do you have any information -- if not, I'll just wait. I understand that you deal with staffing of physicians. Was all other staffing of how the hospital is staffed done by Tenet?
How the -- the only staff that we were responsible for were the staff around the doctors' offices and that kind of thing, and some of those people worked at MCP. So that's the answer. But as far as staffing for any of the hospital-related functions, that was all done by Tenet. REPRESENTATIVE MANDERINO: So if I want to know about the staffing or lack thereof of a social work department, for example, that would go after signing folks up for medical assistance so there wasn't such a large bill for uninsured and uncompensated care, that would be a question you would not know about?
That would be a hundred 48 2/12/04 - COMMERCE - RES. 040046 percent the hospital. REPRESENTATIVE MANDERINO: You did say that you practiced at MCP, did I hear that correctly?
Yes. REPRESENTATIVE MANDERINO: Since when? Give me the front date, the front-end date.
I came to the university in June of 2000 to run the clinical practice group. And at the time I came, I was practicing more. And since I've become Dean, I'm practicing less. But I started out practicing -- I chose -- because I had actually done some work with MCP in my women's health role, I chose to practice at MCP and practiced at the Center for Women's Health with Katherine Sharif (ph). Later on I moved over to the Manayunk practice but still did whatever few cases I had over at MCP Hospital. REPRESENTATIVE MANDERINO: So you were not part of the hospital staff prior to 2000?
No, I was at a 49 2/12/04 - COMMERCE - RES. 040046 different system. REPRESENTATIVE MANDERINO: Then I will save my questions with regard to the social work department, et cetera, for Tenet. I just want to ask one follow-up question that, again, I either didn't hear right or didn't understand your clarification to Councilman Nutter when he was trying to kind of figure out about -- I think this was Councilman Nutter -- about the trauma center. But I had written down Drexel preferred trauma centers at MCP and they ended up at Hahnemann because of the strike or something around the strike. Could you walk me through that in a little bit more detail as to how you want a trauma center at MCP but how it ended up at Hahnemann and what impact the strike had or what impact other factors had?
Sure. Over the period probably beginning in mid-2002, we were having increased difficulty recruiting trauma surgeons. And that's a Philadelphia and State problem, as you well know. And it's due to decreased reimbursement, increased 50 2/12/04 - COMMERCE - RES. 040046 malpractice. The issue for us, because we had two trauma centers seven miles apart, we have to have twice as many surgeons, twice as many of everything, with really the total number of patients that were actually seen were probably what would be one busy trauma service. The issue became somewhat of a crisis as we were losing people, physicians, and having a very difficult time recruiting and we were having to bring other physicians. We had been pretty consistent about saying that from the university's point of view, in order to provide a great Level 1 quality clinical and educational experience, we should probably concentrate those needs at one trauma center. I had lobbied for about a year and a half that that trauma center be at MCP. What we finally got to was that the university would support a trauma center at MCP and that Hahnemann was absolutely free to also have a trauma center but that that wouldn't be necessarily university employees. And in essence, that is what's happened with Hahnemann's trauma center. 51 2/12/04 - COMMERCE - RES. 040046 At about that same time that we finally came up with a solution that made since, the nurses' strike began. And Tenet made the decision that based on the nurses' strike that they would not be able to keep the Level 1 trauma center open. So the end result of this was that for that period of time, there were no trauma centers open. We continued to employ trauma surgeons at MCP that just weren't basically doing trauma. In fact, at one period of time, the only trauma surgeons that we had were MCP trauma surgeons. I hope that gives you sort of the time frame. The university basically realized that for the number of trauma surgeons they were able to attract to this area, they could only be responsible for one trauma unit. And we had made the choice, our chairs and myself, that it would be MCP. Tenet recognized that they needed a trauma unit at Hahnemann and proceeded to go and create a trauma service that was not universally run. REPRESENTATIVE MANDERINO: Again, if 52 2/12/04 - COMMERCE - RES. 040046 I understood the prior testimony, a trauma center is often the intake area for the need for other highly specialized functions within a hospital, whether it's neurosurgery or other kinds of surgery, et cetera. And, again, either I'm not following the time frame or it just seems inconsistent, because the testimony I remembered from last week was that those more highly specialized and more likely income producing functions were already being systematically shifted from MCP to Hahnemann in a two-year time frame prior to the strike and the announced closing.
And I think that testimony was patently incorrect, and I'd be happy to share with the Committee some of the numbers. We created a plan in 2002 to grow neurosurgery, to grow minimally invasive surgery, to grow diabetes and to grow our current strengths like women's health and emergency medicine. Neurosurgery volumes went up significantly. Minimally invasive surgery volumes went up significantly. We formed the 53 2/12/04 - COMMERCE - RES. 040046 largest robotics program in the City. We started a neurosurgery practice network with three different hospitals, including Chestnut Hill and Montgomery, that funneled all their neurosurgic cases into MCP. In fact, the university's entire neurosurgery service, as far as brain cancer and spine, were at MCP. We brought in probably one of the most visible doctors in the City named Dr. Fred Simeone who we recruited to leave Jefferson, I recruited to come to MCP, not to come Hahnemann, to come to MCP. And that was in the 2002-2003 time frame. We recruited the leading minimally invasive surgery doctor in this City to come to MCP, not to come to Hahnemann, to come to MCP. We literally moved from having in 2001 almost no services in the university that were differentiated at MCP, in order words, that weren't duplicated at Hahnemann to having three or four services, that literally the core of the service was at MCP. It actually created a much bigger problem for us when Tenet announced the closure because now I don't know what I'm 54 2/12/04 - COMMERCE - RES. 040046 going to do with my robotics program, I don't know what I'm going to do with Dr. Simeone, I don't know what I'm going to do with some of these networks. We have plans and we will move all those people, but the very fact that it's so complicated for us is because we created all these high volume differentiated services at MCP. REPRESENTATIVE MANDERINO: But of the three differentiated services that you mentioned, to me, neurosurgery, minimally invasive surgery, women's health, diabetes, my layman's mind says minimally invasive surgery, women's health and diabetes are non-trauma related entities, rather boutique services, which I'm not disputing and I appreciate your point that they may have been factors that would have brought money into the hospital in terms of in the plus column instead of the negative column. At this point, I was asking the question only with regard to your pronouncement there was every intent to make the only trauma center at MCP. And then the other surgical and entities that were kind of 55 2/12/04 - COMMERCE - RES. 040046 like what I, at least in my layman's mind, understood to be what you need in the hospital to deal with the people who come in through the trauma center, that was the stuff that was disappearing?
I started my testimony by saying we did those things as an add-on to the traditional services. The reality is that 60 percent of the admissions that we had to MCP for Drexel University physicians was through the emergency room. We did a great job on that. The problem with that, and there's been plenty of testimony of that, that those admissions were predominately low reimbursement, under-served patients that neither the hospital nor we could even come close to breaking even. So the goal was to take those traditional things that we always did well -- we didn't stop doing them. The things we always did well like surgery and trauma and internal medicine and pulmonary and infectious disease where we have great programs, and then add some -- I'm not sure I'd call women's health boutique -- but add 56 2/12/04 - COMMERCE - RES. 040046 some differentiated services that would bring some different kinds of patients into the hospital that might be able to allow us to care for that community and that under-served community with the current rules we existed in and then bring some different payer mix to try to basically balance that out. And from the university's perspective, that was beginning to be successful. REPRESENTATIVE MANDERINO: One of the reasons I started off asking about a social work department -- and I was going to let it go, but you just brought it back around with the last comment, which I have heard many times from Tenet and now from you, with regard to what paid well or what paid at all. And the whole time I just couldn't help comparing a hospital system, for example, like Temple. And I keep hearing what a devastatingly poor community East Falls is. And I know East Falls, and it's a very mixed income, from very high to very low, community. And the demographics of the East Falls community has to be better off than the demographics of the 57 2/12/04 - COMMERCE - RES. 040046 Temple Hospital community. But what I do know that is different -- and Mr. Schaengold said last week, Well, Philadelphia used to have a county general type hospital, and I know they have those in other states. And that's not for better or for worse how we do uncompensated care in Pennsylvania, make one county hospital that everybody with no 10 insurance goes to. And if it was my ideal world, we wouldn't need a county general anyway because nobody would we uninsured. But we are where we are with the system we have, and the way Pennsylvania deals with that system is they have a very generous, more than most other states, medical assistance program in which people can spend down, hospitals can get people qualified and hospitals can get their bills paid. And one of the reasons that Temple, despite the demographics of where they live -- and I know they're struggling like every other hospital, but they're not announcing their closure and they have a very aggressive social work department that makes sure they get people signed up and goes after 58 2/12/04 - COMMERCE - RES. 040046 the money and gets medical assistance to provide the reimbursements. And at least from what I'm understanding, MCP didn't do that. I don't know if they did that before Tenet. I don't know if they did that with AHERF. I don't know if they did that before AHERF. But I'm told that they didn't do it as a Tenet MCP facility. And so all of this stuff about all the money MCP was losing to make us believe that no one else could have made that a going concern rings sour to me. (Applause.)
The Chair recognizes Representative Roebuck. REPRESENTATIVE ROEBUCK: Thank you, Mr. Chairman. I wanted to get some clarity on the testimony about duplicate services. You talked about trauma. Could you give me an idea of all of the duplicate services that were eliminated at MCP or shifted to Hahnemann?
There actually were no 25 services that were eliminated at MCP that I 59 2/12/04 - COMMERCE - RES. 040046 know of and moved to Hahnemann. There were services like neurosurgery, which was the other way, where we decided to put them at MCP. In almost every other situation, we had parallel services at Hahnemann and MCP. Now, in reality, in certain areas they were stronger at Hahnemann, in certain areas they were at stronger MCP. But in every area that I can think of, we had physicians, residents, and students at both campuses. It's a difficult way to run a medical school, but it was one of the things that differentiated us, and we're a very large medical school. So it worked. REPRESENTATIVE ROEBUCK: So the testimony that was given previously, I believe, at the last session which suggested that things like orthopedics and pathology were moved out of MCP is not true?
That is not true. We can talk about each of those. Orthopedics is a situation where a doctor left and went to a different system. We brought in another physician to basically do the orthopedics; 60 2/12/04 - COMMERCE - RES. 040046 that physician left. And at the time -- literally at the time from June to December of 2003, we were negotiating with a few large orthopedic groups to come over to MCP. We were still doing orthopedics at MCP. I'll be happy to share the statistics of the number of the admissions that we had in orthopedics in 2002 and 2003, but clearly orthopedics was one of those specialties where we were not successful at MCP. There was no systematic decision to not be successful, we just weren't successful. I can tell you that between June and December of 2003, I had several meetings with large orthopedic groups about coming to MCP and trying to work out a deal where they would leave where they were and come to MCP, just like I did with Dr. Simeone and just like I did with Dr. Curcillo. I was not as successful, frankly, yet -- and I think I might have been. But I was not as successful with orthopedics as I was with surgery or neurosurgery. REPRESENTATIVE ROEBUCK: Are you 61 2/12/04 - COMMERCE - RES. 040046 telling me that someone left and you got someone to replace them?
Yes. And then that person left. That person also left. And by the end of 2003, we were down to a very core group of orthopedists, but we were still able to see orthopedic patients in the emergency room. We were still able to take care of orthopedic patients. It was -- I mean, of all the things that we can talk about, orthopedics was the one thing that was the least doing well at MCP. There was nothing systematic about it. It was something that I actually view as my failure of not being able to get a better orthopedic group yet into MCP. But that was something that we were spending a good deal of time -- I was spending a good deal of time trying to get somebody to come in and come to MCP. REPRESENTATIVE ROEBUCK: And the same is true of pathology, the same is true of OB/GYN? None of those services disappeared, they were all still intact operating at the same level they had been all along? 62 2/12/04 - COMMERCE - RES. 040046
OB/GYN, I think there was some testimony last time. Obstetrics got moved out of MCP in 1996 so that Allegheny could build the Women's Health Hospital on City Avenue. I remember that just from being an OB/GYN. That was a very big thing. When I got here in 2000, there were almost no OB/GYN services at MCP. I actually set up my practice at the Center for Women's Health at MCP. We recruited someone from Methodist Hospital to come and be the Chief of GYN at MCP Hospital. It was very difficult for that individual because there's not any obstetrics there. And I don't want to get into all the mechanics, but it's very difficult to run a practice of OB/GYN where you're doing GYN in one place and obstetrics in another place. So we brought this person in. The university gave this person significant support. He did not make it and moved over, I believe, to one of the other hospitals. Then we brought a young woman in who is still currently at the Manayunk office. 63 2/12/04 - COMMERCE - RES. 040046 But the reality is that gynecology was not one of the things that was very busy at MCP. That's true. Now, the Center for Women's Health, there is predominately an internal medicine run center for women's health. The person that runs it, Katherine Sharif, who I appointed as the Director for the Center of Women's Health, literally runs that from a very internal medicine model. That's what she believes in. But GYN is something that I also would have liked to have more of, and we're trying to work out something with some of folks at Chestnut Hill Hospital, we're trying to do something between MCP and Roxborough. Again, all these things were happening in 2003. In any physician group in any university at any time, there are things that are moving in, there are things that are moving out. There are four medical schools here in a real short span of blocks, and at any period of time, I'm talking to people from Jefferson, Temple, and Penn. And I find out 64 2/12/04 - COMMERCE - RES. 040046 that my faculty are talking to Jefferson, Temple, and Penn and as well as leaving the State and all of those kinds of things. So the reality is that, yes, we were inconsistently successful in being able to attract all specialties to MCP. I mean, that's probably the most objective way of putting it. But we continued up until the end of 2003 to be trying to bring those specialties. REPRESENTATIVE ROEBUCK: Just a final observation, there is a distinction in my mind between physicians talking to Penn or Jefferson or Temple and doctors shifting from MCP to Hahnemann. That seems to be, to me, a very clear distinction in that. If you're talking about all these doctors having gone someplace else, then that's one thing. But if you're talking about a merely shifting to another hospital within the same system, that's something different.
And I will be happy to get to the Committee sort of a summary of the influx or efflux of doctors. I dispute the 65 2/12/04 - COMMERCE - RES. 040046 fact that there was an ongoing shift from MCP to Hahnemann. Did some people go from MCP to Hahnemann? Yes, they did. The example that I've given in the testimony about cardiology is a perfect example. Our primary cardiology group was and is at MCP. The reality is the numbers that went down at MCP were because of one private cardiologist that had nothing to do with Drexel or Tenet who chose to stop, basically stop sending his patients to MCP, started sending his patients to Hahnemann. Since that time, he has stopped sending his patients to Hahnemann. And if you look at this person's history, every year and a half, he sends his patients someplace else. Welcome to medicine in Philadelphia. That is what it is. But no cardiologist left us. And it was bad for us because our cardiologists were seeing less patients and it wasn't a good thing and we were in the process of trying to get new referrals through Roxborough and other ways into MCP. REPRESENTATIVE ROEBUCK: Thank you.
Thank you, 66 2/12/04 - COMMERCE - RES. 040046 Representative. You could please forward that information, Doctor, to the Committee through the Chair. And the Chair recognizes Senator Hughes. SENATOR HUGHES: Thank you, Mr. Chairman. Dr. Klasko, I'm learning a lot about how you were trying to make things come together here, and I think a lot of us are learning about how all of this plays itself out, not just at MCP and Hahnemann, but in the larger healthcare reality here in the City. And part of my questioning goes to the larger issues. I have a gut feeling that we're dealing, if you will, an iceberg here and there's a little bit on the top but the monster in this iceberg is underneath the water here, and that relates to the larger situation. So I've got a couple questions, and I'll do my best to be brief. What is Drexel University and the Drexel University College of Medicine prepared 67 2/12/04 - COMMERCE - RES. 040046 to do to contribute to providing high quality healthcare for that community?
We're prepared to work with whoever ends up owning facility. If the facility is to be maintained as an acute hospital, we are prepared to work with whoever that body happens to be. But we're not in the hospital business. SENATOR HUGHES: But hospitals are relevant to your College of Medicine.
Absolutely. And we prefer that somebody comes forward who's in the hospital business that wants to manage the hospital, and we'll respond to that when that occurs. SENATOR HUGHES: What does all of this mean to the financial viability of the College of Medicine? What is your financial status right now?
With the closing of MCP over approximately an 18-month period of time, it will cost us approximately $35 million in lost revenue. When you lose 35 million in revenue, you have to downsize your 68 2/12/04 - COMMERCE - RES. 040046 operation to the same level. SENATOR HUGHES: What does that mean -- so I can understand the location and the geographics, you have the facility up on Queen Lane, right?
It has no effect at all on the Queen Lane facility. That's where we teach our students for the first two years of their education. And it may ultimately affect our ability to do some research up there, but it doesn't affect at all the Queen Lane facility. SENATOR HUGHES: I heard someone say -- it may have been Mr. Stamatakis, it may not have been Mr. Stamatakis, but it may have and it could be through a couple different parties -- that there was a three-year commitment around the College of Medicine and the teaching facilities and all that other kind of stuff. And I may be slightly off here, so bear with me. But three years is about the length of time that it takes to send someone through the educational process, is that correct? 69 2/12/04 - COMMERCE - RES. 040046
Let just sort of give you the background for that. The first two years -- SENATOR HUGHES: So that means the students that would already be in there, they're there, but what does that mean for recreating new students to come in and all of that other kind of stuff?
We take 250 medical students a year. That's thousand students. SENATOR HUGHES: When do they make their commitment to come?
They're making their commitment now for this coming summer. SENATOR HUGHES: Are you seeing a drop in --
We are not seeing a drop in applications and we're not seeing a drop in quality of applications. Let me just sort of to get us all on the same level. The first two years are spent at Queen Lane, and they are basic science years. The third and fourth years are in essence an apprenticeship. It's learning the 70 2/12/04 - COMMERCE - RES. 040046 clinical practice of medicine, and they have to be done at hospitals. You hardly need hospitals at all for the first two years of a medical student's career. Of our students, their third and fourth year, only 45 percent of their experience is at Tenet hospitals, at MCP or Hahnemann. So 55 percent of our students go to other hospitals in Pennsylvania. That's one of the differentiating things about our medical school. That includes Allegheny General in Pittsburgh, that includes Easton Hospital, that includes York Hospital. There are lots of hospitals. Of those 45 percent that have their clinical experience at Hahnemann and MCP, about a third of those were at MCP. So that's the clinical student problem we have. Now, the answer to what this means to us as far as recruiting is, that as long as we can find another place for them to do the clinical part of their apprenticeship that has the same kind of qualifications from an education point of view as MCP did, then we 71 2/12/04 - COMMERCE - RES. 040046 can keep our student numbers where they were. So our decision of exactly how many students that we will accept, what we're hoping to and planning to accept the same number of students that we had previously. But we will need to have other hospital partners to do that with. SENATOR HUGHES: Help me with the understanding of the -- you said there was a $35 million hole or $35 million loss?
We currently on the clinical side at MCP, along with our reimbursement for teaching, recover approximately $35 million a year of our operation comes from that. If all of that goes away, I have to reduce my expenses by $35 million. SENATOR HUGHES: And how would you do that?
Well, with the combination of laying some folks off, of reducing the size of the faculty. We're principally a labor intensive business, so I don't have a lot of other alternatives. 72 2/12/04 - COMMERCE - RES. 040046 SENATOR HUGHES: Just so I can see the picture in my mind -- and I'm trying to work with you. Reducing the size of your staff, reducing the size, I think I heard you say that, where would those reductions occur?
I'm going to reduce the size of my faculty and I'm going to reduce the size of my administrative staff. SENATOR HUGHES: And so that would occur at what location would they be reduced?
It would occur principally at MCP. SENATOR HUGHES: Any place else?
I guess -- SENATOR HUGHES: What I'm trying to get to is, at some point we're going to have to put a deal, City, State, Feds are going to have put a deal to support somebody else coming in and taking over. I need to know what Drexel University, if it's financially viable, what Drexel University's prepared to contribute to that. And obviously you don't know until we see what the deals is. But what are you prepared to help the folks in East 73 2/12/04 - COMMERCE - RES. 040046 Falls and that surrounding area to have a strong viable -- you know, we spend a lot of dollars from the State over the last five, six, seven years to the institution to help this thing go. What are you prepared to give back?
We're committed to taking care of the needs of that community. We are doing that as we speak. I think it's important to know that we have not today moved hardly any people out of that site. We have neurology services, we have full internal medicine services. I mean, the hospital is obviously down significantly. And we have residents there that are literally sitting on their hands because there's not a whole lot to do. And if tomorrow, waving a magic wand, there's a hospital operator that chose to make that into a viable entity, nothing changes for us. We'd be happy to make that a campus if it had the right metrics to it. So the reality for us is that we want to and are committed to care for that 74 2/12/04 - COMMERCE - RES. 040046 community. And even if that hospital isn't there, we will continue to run our primary care practices in that area and work on some of the women's health issues and the other issues that have been strong for us in that area. SENATOR HUGHES: My last question. It's probably more related to Mr. Schaengold and the whole Tenet situation, but I'll kind of lay it across the table. With their precarious national financial situation -- I think we all know this. How does that impact from a larger perspective the ability -- I mean, this Committee is responsible commerce and economic vitality of the City and what-have-you and these strong paying jobs that come out of your industry at all ends. How does that relate to your capacity to do what you do? I'm suspecting this is, as I said, the tip of iceberg here. I'm suspecting that not too far from now we'll hear about other closings. That's my suspicion. It may be gut, but it's borne out by a lot of data. 75 2/12/04 - COMMERCE - RES. 040046
From my perspective, I'm incredibly proud of what Drexel University College of Medicine has been able to do the in last five year. There are a lot of external barriers. There is the malpractice barrier. I think Tenet's financial situation is now another hurdle. So there are lots. One good thing about this entity, it started with Hahnemann and MCP and then became Allegheny. One of the good things about this entity is it's been incredibly resilient as a university entity. And my commitment and Mr. Archibald's commitment is to make sure that the three missions that we are involved in, one of which is the clinical mission for the East Falls community, remains strong despite all those issues. I'm a dean. I can't sit and worry about whether or not Tenet's asset to debt ratio is good today. That's Mr. Schaengold's problem. But I do need to know that my students has a good hospital partner. SENATOR HUGHES: It sounds like you need to spend more time on that, given how you found out about this. 76 2/12/04 - COMMERCE - RES. 040046
I do have a Wharton MBA, but I still can't worry about that. I have to make sure that given the cards that we're dealt with, we're taking care of our patients, we're doing research, and we're educating our students and residents and that I'm being a good dean to our faculty and staff. And this has been incredibly, incredibly trying situation for us. I mean, we are clearly one of the victims here as far as whatever happened that ended up in the closure of MCP. We will move on and be strong. SENATOR HUGHES: Thank you very much. I would just say, Mr. Chairman, the larger issue here, and given the specific responsibility of this Committee, there is clearly a larger issue here with respect to the economic vitality of this City as it relates to this particular industry. The precariousness with Tenet situation, with how it relates to the healthcare reality in City 77 2/12/04 - COMMERCE - RES. 040046 -- and I commend this Committee for continuing to do that. But I think we need to have more in addition to this, not necessarily more hearings at this point, but more conversation about this. I think we're at the tip of the iceberg here, and I think there's a lot more that's potentially coming down the line a couple years from now; if not, sooner than that. So I thank you for your attention.
Thank you, Senator. For the record, Dr. Klasko, you are forwarding to this Committee an accounting for resources that you had at MCP last year and the resources you have at MCP as of this date?
Well, how about as of 2002 as of the announcement of the closure and as of the date of this hearing? Can that be done?
Thank you. Councilman Nutter, do you have 78 2/12/04 - COMMERCE - RES. 040046 further questions of this panel?
Yes, I do. Thank you, Mr. Chairman. Dr. Klasko, let's go back. You talked about all of the additional services that were starting up or being provided in the 2001, 2002, 2003 time frame, a trend that was clearly going upward. I took down a note you made mention of a business plan in 2002. Is this a business plan that you had developed?
It was basically a business plan for the growth of services at MCP.
And did you share this with the Tenet management or the management of the Hospital?
This is in your capacity as dean of the medical school?
At that time I was vice dean for the MCP campus. And The other thing that 79 2/12/04 - COMMERCE - RES. 040046 the university did is it wasn't just bringing over a dean for the campus, it brought over four senior individuals and operations and business development to actually -- our core business development team actually existed at MCP, not at Hahnemann at that period of time in 2002.
And what did your business plan show in terms of these enhanced services and their anticipated impact on the operations and revenues of MCP?
Well, you might not like this answer, but the reality is that what we do is we would evaluate that from the point of view of our mission and then hand that over to the hospital to see if it made sense for them to do. They would do an analysis of what it meant for their revenues and decide whether or not did they wanted to invest in that. So I didn't do the analysis of what it would mean for hospital revenues because I wasn't privy who how Tenet billed or calculated their hospital revenues.
Was the business 80 2/12/04 - COMMERCE - RES. 040046 plan accepted?
In many cases it was. And again, each one of these had different components to it. So the neurosurgery business plan was, the minimally invasive surgery plan was, the gynecology business plan was, the diabetes business plan was.
And when you say they were accepted and were they then followed?
Yes. The investment was made and, as with any business plans, some of them were successful and some of them were not as successful due to some external factors that we hadn't predicted when we made the original business plan.
I think one example would be in gynecology. We brought in, again, a young physician, a gynecologist from South Philadelphia, who came up to MCP and he kept his office in South Philadelphia. And he had presented to us that he would be able to move those patients to MCP. The reality was that 81 2/12/04 - COMMERCE - RES. 040046 he wasn't able to. So he was able to take care of the MCP patients that needed to be taken care of, but we weren't able to increase the volume as we had hoped by bringing new patients into the MCP system. So that was one example where it was mildly successful, but from this person's perspective, his practice without being able to do obstetrics, was not going to be able to continue to be viable at the MCP campus without this new volume and without being able to do obstetrics.
Well, that person, whoever they are, can't be the only OB/GYN that might want to have patients come to MCP.
That's true. And we were constantly recruiting OB/GYNs. As I said, we brought in a young woman who practiced. We had looked at a proposal to bring in a large group from the Chestnut Hill area bring that to MCP, and That particular proposal was not accepted.
I'm not sure. It just wasn't. I mean, we would give business plans -- again, what I want to say is that during that period of time from 2002 to 2003, almost every plan that we move forward with Tenet, they evaluated and they agreed to. I'd say about 70 or 80 percent of them, that was the case. The other percent, they would 13 say, "We don't think this makes sense for us." 14 Didn't always have an answer. 15
You're telling me 18 a decision was made to hire a physician that 19 had a practice in South Philadelphia and 20 someone believed, really, truly believed that they were going to be able to get people to come from South Philadelphia to the Northwest section of the City? That's really how that happened?
Doctors believe that 83 2/12/04 - COMMERCE - RES. 040046 their patients will do anything to see them. And this individual felt that was the case. We, frankly, had the same kind of skepticism that you did. But it gets back to the point that was made. We weren't going to leave any stone unturned. The reality is, for a year we had a really good gynecologist there. And if he was willing to take that chance, then that was fine.
But if any doctor just decides he wants to come and just set up shop at a hospital, I don't -- who actually said that this is a good idea at the hospital end?
In 2002, we went out, I went out, my team went out and said the MCP campus is the happening campus. And We talked about how we would work with doctors to help them achieve their goals. And that got us 84 2/12/04 - COMMERCE - RES. 040046 people like Dr. Simeone, Dr. Curcillo that got a lot of young physicians that aren't as visible as people like Dr. Simeone and Dr. Crissillo. We went out there and sold MCP. I don't know how else to put it. And We sold it in just about every area. This particular physician liked what we were doing, what Drexel was doing in OB-GYN, knew of me and said, "Hey, maybe I'll come out to MCP." I had, "Well, you're in South Philly." And he said "Let me start. I'll keep my office in South Philadelphia, and do cases at MCP." And many of his patients DID come, believe it or not, A lot of his patients.